Brussels, 25/07/2012 (Agence Europe) - On 25 July, the European Commission approved until 31 December 2012 a new Spanish scheme aimed at strengthening the capital basis of banks under EU state aid rules. The Commission found the scheme to be in line with its rules on state support to banks during the crisis “because it is limited in time and scope and contains exit incentives”. The Commission adds that the distortive effect of the recapitalisations will be minimised by adequate remuneration conditions, including annual step-up clauses. Conditions for a recapitalisation also include bans on the payment of dividends and on coupons for hybrid capital instruments. Banks benefiting from a capital injection need to provide a restructuring plan showing how they will restore their long-term viability without continued State support.
The recapitalisation plans for Spanish banks must spread over 18 months, starting in July 2012. By the end of September this year, the outcome of the current stress tests of some 90% of the Spanish banking industry will be known. The stress tests will determine which banks will need external recapitalisation aid. Last Friday, the eurozone's finance ministers approved a Spanish aid plan of up to €100 billion to recapitalise the country's banks. (OL/transl.fl)